Learn 10 Facts about Walmart-Flipkart deal and its impact on Indian Retail Industry

The deal doesn’t just validate the potential of the Indian retail market but it also sets the stage for the big showdown between Alibaba, Amazon and Walmart. It makes Indian retail hard to be ignored, which is expected to be a $200-billion market by 2026.

A combination of online and offline is the new way forward

A physical retailer buying a digital retailer is an interesting deal. It is the beginning of a new dawn for retail and every passing day will make it more interesting to explore.

With Walmart taking such a big bet on India, a lot of US strategists will start looking to get into India and not wait for Venture Capitalists to take the first step. India, Indonesia, Malaysia are the markets where there is growth. Also this deal boosted the confidence of new investors like SoftBank, Accel, and other investors who kept investing (in India) for a long time with no return. This finally gives the much-awaited return to these investors.”
“Though not technically, but the deal is going to strengthen the entire Indian ecosystem many folds”.

Data is the new fuel

Winning in India is about tapping more and more customers. Walmart, which failed to make a successful entry in India in offline retail space, can now sell its products online to 1.3 billion population of the country. Having an access to Flipkart’s 10 crore customers’ data. Applying AI or other BI tools could approach customers in many lucrative ways and boost the use of latest technologies in Indian Retail Sector.

Branding (The name and the Fame) is still an important aspect for Indian Startups

Despite having another lucrative offer from Amazon that was green-signaled by SoftBank, Flipkart decided to go with Walmart. This was because, with an Amazon merger, there were chances that Amazon would dilute the Flipkart branding in order to promote Amazon. For instance, Amazon would have merged PhonePe with Amazon Pay; the main portal Flipkart.com with its own Amazon.in; Even the supply chain could have been merged. While, Walmart will allow Flipkart to continue to function without losing or diluting its brand.

Best of supply chain management tools and techniques are yet to be experienced by Indian Retailers

In this case, along with funding, comes the huge expertise of Walmart in retail and supply chain, something Flipkart really needs if it is to take on Amazon. The sectors that will see huge changes in the next few years are supply chain management, the farm-to-fork sector, food and groceries, and inventory management and vendor management.

Graduated to Second phase of e-commerce Journey

The deal marks the end of the first phase of India’s e-commerce journey and the start of the second phase. The first phase was dominated by hyper-competition, extreme growth and the battle for gaining market share at any cost. This also led to a lot of players betting on “wrong business models”. In the second phase, a consolidated in the industry, a lot more focus will be on business models, integration and scale. And that’s good for future of e-commerce in India.

Big Battle between Walmart and Amazon opens up in India over FMCG

It will be in the food and grocery segment. Last year, Amazon received government approval to start a venture to sell locally produced and packaged food items through offline and online channels. And beings an expert in this field, Walmart is expected to use a good part of its investment to build infrastructure including food parks, cold chain and collection centers. Walmart has something that Amazon doesn’t & that is the ability to take fresh farm produce through very sophistically developed cold chains. Flipkart will act like its technology arm while entering into the world’s largest food and agriculture market of the world, with the promise of opening stores as well.

Customers will be in a very beneficial position

Two giants fighting for market share in e-commerce may translate into bigger discounts and more sale days. In the overall ecosystem, customers will be in a very beneficial position. That also means the overall time for the e-commerce sector to get profitable will be much longer than seen in other countries. As consumers are more attuned and comfortable to shopping online, we see vertical specialists (largest categories being fashion, second electronics) also benefiting.
Another beneficiary is the farmer because under Walmart’s farm-to-fork strategy, procurement will be done at the village level, directly from the farmers to customers. However, it remains to be seen whether the model remains limited to urban India or is it implemented in rural India as well.
Flipkart vendors and sellers are apparently not happy with the move, suspecting Walmart of diluting their profits further.

This deal is just a beginning

“Walmart’s entry in Indian ecommerce is just the beginning. There are many large Chinese players like Alibaba, Tencent, etc. that are keen to keep investing in India, including in ecommerce. And in the next six months, more acquisitions like this on its way.

Check Who is happy to comeback: Another US ecommerce biggie, eBay, which last year sold its eBay India stake to Flipkart, gaining a 6.5% stake in Flipkart (while losing some cash, of course) has announced a comeback in the Indian market by reviving its eBay India brand

1 Comment

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